Hi,
I encourage all property investors to read the RBA productivity commission submission re: first home buyers. click here to view
It is an exceptional read about what the RBA believes about the rise in property prices.
Of huge interest is the discussion about tax benefits and identifying possible areas of differentiation between Oz and other countries.
Also of interest is the comments about property yields in Australia being so low when compared to other countries.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Great article Steve,
Oz cash yeild 2.5 percent
Other country’s 7-10 percent
Commercial 8-9 percent
Indeed why the rush to get 2.5
Also an admission that $62,500 is a low top tax margin……interesting!!!!
Thanks Steve
Geoff
Hi Guys
Does this article mean that tax changes are coming?
Regards
Probably not Muppet. But the looming budget surplus right in an election year might mean that there are some tax cuts coming.[
]Cheers
MelI wouldn’t think so.
The government won’t change the tax brackets as they like the money too much. As for changes to the -ve gearing rules, most of this talk will probably subside once the market noticeably cools.
My opinion only.
Rod.
interesting to read, though that took about 10 mins of my time and i want it back, nah just kidding.
But i am pretty sure there is a new change in the tax systme, some where amongst the postes on this forum are the new tax changes that are listed.
news.com.au has mace much of the section on negative gearing:
“NEGATIVE gearing is under threat, with the Reserve Bank identifying far-reaching changes to the taxation of property investment to fix the housing bubble by dampening investor interest.”
That would put the cat amongst the pigeons eh?
+ gearing rocks on a number of different levels.
Wayne
Bring on the destruction of negative gearing, but please wait until I’ve got all my loans refinanced. Then cash will be king!
Cheers
MelI seriously doubt whether negative gearing will get the flick… Labor tried it once before back in the 80s and it was a disaster.
Cheers
rrichmond, I absolutely agree with you. My statement was sort of tongue in cheek, in that if it does ‘get the flick’ then there will be a lot of high income borrowers who will no longer be interested in investing in property, and will sell en masse!
At that point, ‘real estate doom’, but lots of bargains, and shortage of rental housing.
Cheers
MelThe paper makes many good points, but there’s some that raised my eyebrows:
1. Boom Australia-wide. Seems to be the case for much of eastern Aust (incl Tassie) but some parts of regional WA (including cities) have so far missed out.
2. Yields of around 3.5%. This would be so for Sydney & Melbourne, but higher for other places, which I initially thought would have inflated the figure.
Then I wondered how they got the figures – maybe
gross yield = Total rents collected/Total worth of residential propertyThis would skew the national figures towards the big cities because not only are they more populous and have more properties, but the properties are much more expensive on average.
Sydney and Melbourne might have 40% of the national population, 40% of the houses but maybe 60-70% of the property value of the nation. Thus those two cities would disproportionately skew the stats.
3. 8-9% yields common for commercial property. The only auction for a retail property I ever attended resulted in a price of $2.2m for a return of $100k. This is a return of 4.5% in a suburb where yields from houses are 3.5-4%.
Maybe this was an oddball, but it shows that at least at the auction I attended the property boom is not just confined to residential!
Interesting stuff!
Regards, Peter
Hi Mel
Interesting readingon the other posting.
You say above there may be a shortage of rentals fif he high income earers flick their properties off.
Why?
The houses don’t disappear. It’s just there will be alot for sale with their tenants still in them.Regards
There will most likely be some tax changes but not in the way you expect. When labor changed the rules in regards to negative gearing they didn’t think it out carefully enough.
There is definitely a push at the moment for changes by the ATO, but what measures. The govt wants to increase purchasing power of FHO’s ,but doesn’t want to give this to investors. The ATO wants to decrease the tax reductions made by investors and obtain more revenue from investors,.
What MAY occur this time is a change in stamp duty. FHO may be totally exempt and investors will be charge extra per investment, say 5% and this will increase to a max of 20% on each investment. For example if the original stamp duty is $1000 then this is increase by 5% if you have 2 IP’s then 10% so on until a max of 20% on every new IP. This increases affordability for FHO’s and also gives the Govt the lost revenue by hitting the pockets of investors.
C2
“Is it true the more you owe the more you grow until the bank steps in?”Hey Muppet
The investors who are selling will outnumber the investors who are buying by a good proportion. If it is true that only 10% of properties are cash positive, then the ration of neg to pos is 9:1.
If only 1/2 of these negatively geared investors want to sell, that’s a huge number, and if there are no other investors willing to come in and lose money, the prices will have to fall, and there will be less rental properties available.
The more they fall, the more that some negatives will come round to the positive side, which is good for those investors who are left, and still have cash or borrowings available.
The yanks did abolish their negative gearing in 1986, and it led to the scenario above. It took them years to recover, but they did not reintroduce the negative gearing.
Our government learnt some of those lessons in 85-87, (I don’t think the law was retrospective) there were less people purchasing investments, and so there was less (not less, but not growing to keep up with numbers requiring accomodation) available for rent, and public housing waiting lists skyrocketed.
Cheers
Mel
]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
